The following tables present the activity in the allowance for loan losses for the nine months ended September 30, 2022 and September 30, 2021.

The following tables present the balance of the allowance for loan losses, the allowance by impairment methodology, total loans, and loans by impairment methodology as of September 30, 2022 and December 31, 2021.

Gross commercial loans included $138 thousand and $69.6 million of Paycheck Protection Program (“PPP”) loans as of September 30, 2022 and December 31, 2021, respectively. The Company does not maintain an allowance on these loan balances, as they are 100% guaranteed by the U.S. Small Business Administration (“SBA”). Management believes the ending allowances at each of the dates indicated were sufficient to absorb the probable losses inherent in the loan portfolio at those dates.

The following tables present a summary of impaired loans and the related allowance as of September 30, 2022 and December 31, 2021.

(1)	Amounts shown for the twelve month period ended December 31, 2021.

The following tables present a summary of past due and non-accrual loans by class as of September 30, 2022 and December 31, 2021.


	September 30, 2022
	30-59 Days		60-89 Days		90 Days or								90 Days or More
	Past		Past		More		Total Past				Total		Past Due and		Nonaccrual
(Dollars in thousands)	Due		Due		Past Due		Due		Current		Loans		Still Accruing		Loans
Real Estate Loans
Commercial	$	—	$	—	$	—	$	—	$	1,091,221	$	1,091,221	$	—	$	—
Construction and land development		—		—		—		—		199,324		199,324		—		—
Residential		—		—		—		—		385,696		385,696		—		—
Commercial		—		—		—		—		45,105		45,105		—		—
Consumer		—		—		—		—		585		585		—		—
Total Loans	$	—	$	—	$	—	$	—	$	1,721,931	$	1,721,931	$	—	$	—


	December 31, 2021
	30-59 Days		60-89 Days		90 Days or								90 Days or More
	Past		Past		More		Total Past				Total		Past Due and		Nonaccrual
(Dollars in thousands)	Due		Due		Past Due		Due		Current		Loans		Still Accruing		Loans
Real Estate Loans
Commercial	$	—	$	—	$	—	$	—	$	968,442	$	968,442	$	—	$	—
Construction and land development		—		—		—		—		231,090		231,090		—		—
Residential		—		—		—		—		342,491		342,491		—		—
Commercial		—		—		—		—		122,945		122,945		—		—
Consumer		—		—		—		—		586		586		—		—
Total Loans	$	—	$	—	$	—	$	—	$	1,665,554	$	1,665,554	$	—	$	—

The following tables present a summary of credit quality information for loans by class as of September 30, 2022 and December 31, 2021.


	September 30, 2022
			Special								Total
(Dollars in thousands)	Pass		Mention		Substandard		Doubtful		Loss		Loans
Real Estate Loans
Commercial	$	1,091,221	$	—	$	—	$	—	$	—	$	1,091,221
Construction and land development		197,174		2,150		—		—		—		199,324
Residential		385,588		—		108		—		—		385,696
Commercial		45,105		—		—		—		—		45,105
Consumer		585		—		—		—		—		585
Total Loans	$	1,719,673	$	2,150	$	108	$	—	$	—	$	1,721,931


	December 31, 2021
			Special								Total
(Dollars in thousands)	Pass		Mention		Substandard		Doubtful		Loss		Loans
Real Estate Loans
Commercial	$	961,177	$	7,029	$	236	$	—	$	—	$	968,442
Construction and land development		230,704		—		386		—		—		231,090
Residential		342,377		—		114		—		—		342,491
Commercial		122,945		—		—		—		—		122,945
Consumer		586		—		—		—		—		586
Total Loans	$	1,657,789	$	7,029	$	736	$	—	$	—	$	1,665,554

The Company assesses credit quality based on internal risk rating of loans. Internal risk rating definitions are:

Pass: These include satisfactory loans that have acceptable levels of risk.

Special Mention: Loans classified as special mention have a potential weakness that requires close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Company’s credit position at some future date. These credits do not expose the Company to sufficient risk to warrant further adverse classification.

Substandard: A substandard asset is inadequately protected by the current worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as substandard must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful: Loans classified as doubtful have all the weaknesses inherent in a substandard asset with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loss: Loans classified as loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be received in the future.

As part of the Company’s loan modification program to borrowers experiencing financial difficulty, the Company may provide concessions to minimize the economic loss and improve long-term loan performance and collectability.

The Company had a recorded investment in TDRs of $530 thousand and $549 thousand as of September 30, 2022 and December 31, 2021, respectively. The Company did not have any loans that were determined to be new TDRs during the three or nine months ended September 30, 2022 and September 30, 2021.

As of September 30, 2022 and September 30, 2021, all loans in TDR status were in compliance with their modified terms. There were no loans modified in TDRs that subsequently defaulted within 12 months of their modification date during the three or nine months ended September 30, 2022 and September 30, 2021.

All TDRs are considered impaired and impairment is determined on a loan-by-loan basis by either the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent. As of September 30, 2022 and December 31, 2021, none of the Bank’s TDRs required the recordation of a specific reserve. As of September 30, 2022 and December 31, 2021, there were no additional commitments to disburse funds on loans classified as TDRs.